Gas Production Commences at Tanzania’s Kiliwani North Gas Field

Operator at the the Kiliwani North Development Licence  Aminex has announced gas production from its Kiliwani North gas field’s Kiliwani North-1 well (‘KN-1’)  in Tanzania has commenced on schedule as had earlier been announced.

According to Aminex production is expected to build up to an anticipated production rate of 25-30 mmcfd (approximately 4-5,000 barrels of oil equivalent per day gross) over the next 90-100 days.

KN-1 is tied into the regional pipeline infrastructure and will deliver gas to the new adjacent Songo Songo processing plant, ultimately serving the local power market.

The gas delivery point is to be at the outlet flange of the Kiliwani North wellhead and, by selling the gas at the wellhead, the joint venture partners will not be liable for pipeline transportation and processing fees.

Aminex adds that all gas produced during the build-up to full production rates will be paid for under the terms of a recently signed Gas Sales Agreement signed with the sole buyer, Tanzania Petroleum Development Corporation (‘TPDC’).

Aminex will receive US$3.00 per mmbtu (approx. US$3.07 per mcf) with expected net cash revenues of US$10-15 million per annum.

“ First gas at Kiliwani North marks the transition of the Company from developer to producer in Africa and sets us on the path for growth as we begin to generate cash.  The Company looks forward to its exciting appraisal and development programme in the Ruvuma Basin which will potentially add further revenues in due course,’ says Aminex CEO, Jay Bhattacherjee.

Initial production rates will be carefully managed to allow for testing and commissioning of the gas processing plant and pipeline, while recording critical pressure and flow rate measurements to determine the optimal flow rate to maximize the life of the reservoir.

Together with TPDC Aminex adds it plans to conduct a well test during the production build up to determine the optimal flow rate that will become the Commercial Production Rate from which the Company intends to flow gas at this rate for as long as possible prior to a natural decline in production.

KN-1 represents contingent resources (2C) of gross 28 billion cubic feet gross. With first production complete Aminex expects to book reserves for Kiliwani North later this year.

“Solo is delighted to see its investment in the Kiliwani North project move into production. This is a truly transformational step for the Company. Resulting revenues will initially be reinvested in growing our reserves base in Tanzania, a country which has new national gas infrastructure and huge prospects for growth in the local gas market.  Solo also looks forward to progress on the Ntorya appraisal in the Ruvuma PSC where a substantially larger gas discovery has been made and where Solo already holds a 25% working interest,” says Solo’s Chairman Neil Ritson.

Current participants in the Kiliwani North Development Licence, following TPDC back in, are: Ndovu Resources Ltd (Aminex) 55.575% (operator), RAK Gas LLC 23.75%, Solo Oil plc 6.175%, Bounty Oil & Gas NL 9.5% and TPDC 5%.  On completion of the payments envisaged by the SPA Aminex will hold 51.75% and Solo will hold 10%.